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Earth Day 2023: Investing to save the planet and the people who live on it

20 April 2023

We are confident in fund groups’ ability to manage savers’ money in a way that benefits the earth and the people who live on it as well as producing positive returns.

By Jake Moeller,

Square Mile Investment Consulting and Research

Earth Day is a celebration of eco-consciousness that will be marked on 22 April in more than 190 countries, making it the most widely observed non-religious event. This year it takes ‘Invest in our planet’ as its theme which should resonate within financial services.

The asset management industry in particular has the potential to be an invaluable ally to the movement for halting climate change, protecting the environment and creating a more equitable society.

Indeed, in its recent paper Greening Finance: A Roadmap to Sustainable Investing, the UK government has recognised the sector’s vital importance in channelling capital flows away from harmful industries and towards those that can have a positive impact on the planet.

We, too, are confident in fund groups’ ability to manage savers’ money in a way that benefits the earth and the people who live on it as well as producing positive returns. Here we identify five funds that both lead the way in responsible investment and in demonstrating the force for good that their investments are having.


FP Wheb Sustainability

Founded in 2009, WHEB Asset Management is a pioneer in responsible investing and the fund managers of the Square Mile Responsible AA-rated FP Wheb Sustainability fund believe passionately in responsible investing.

Their investment process sets a high hurdle for stocks to be included in the portfolio – all investments are framed within nine themes focussed on five environmental and four social challenges: cleaner energy, sustainable transport, resource efficiency, environmental services, water management, well-being, health, safety and education. A stock can only meet one of the nine themes if at least 50% of its revenue or profits are attributable to the theme.

The team then conduct a proprietary impact assessment on each stock and multiply it by the proportion of revenues attributable to the product or service to obtain an overall impact intensity score for the stock.

More information is detailed in the fund's in-depth annual impact report. In addition, an impact calculator and map are publicly available on the firm's website. We view favourably on such transparency and detailed reporting.


Ninety One Global Environment fund

The Ninety One Global Environment fund, which holds a Square Mile Responsible A rating, aims to contribute to and benefit from the drive to a decarbonised world.

Its managers believe that sustainable decarbonisation will require the following three thematic shifts: renewable energy generation, electrification of transportation and improved energy efficiency and all fund holdings are exposed to at least one of these themes. To be investable, a company must derive at least 50% of its revenues from environmental solutions linked to one of the three themes.

The fund’s impact report details the carbon footprint and carbon avoided of the strategy versus the index as well as the renewable energy produced for every $1m invested. The managers want all their companies to report carbon emission reduction targets approved by the Science Based Targets Initiative (SBTI) by 2030, putting the portfolio on track to be carbon neutral by 2050.

As at September 2022, approximately 42% of the portfolio meets this requirement.

Schroder Global Energy Transition

The managers of the Square Mile Responsible A-rated Schroder Global Energy Transition fund focus on identifying companies that are driving the transition to lower carbon sources of energy. This leads them to consider companies involved in areas such as renewable energy equipment and generation, transmission and distribution, energy storage and efficiency, and hydrogen power. It also applies a range of exclusions across fossil fuels, nuclear power, weapons, tobacco and alcohol companies.

The team regularly engages with companies on, and provides non-financial impact reporting, for the Luxembourg-domiciled Schroder ISF Global Energy Transition fund which is managed along identical lines to this fund. The reporting uses the firm’s proprietary impact tool, SustainEx, which quantifies the various positive and negative externalities of companies.


Royal London Sustainable World Trust

The team behind the Royal London Sustainable World Trust, which carries a Square Mile Responsible A rating, recognises that investing sustainably is subjective and that views on sustainability can change over time. They therefore maintain a fluid, adaptable process.

Indeed, the success of the fund has partly been down to this adaptability. By traditional metrics, it could be considered as lighter green than many other peers. However, the managers impose a high hurdle rate for inclusion.

Any concerns over a holding’s environmental, social and governance (ESG) credentials are analysed in a similar way to financial considerations to re-assess its inclusion in the portfolio, rather than it automatically being removed.

The managers use third-party research and ratings on a business's sustainable characteristics as a starting point for their own proprietary research and not as the ultimate arbiter for inclusion. The team's approved list is independently reviewed by an external advisory committee, which include experts from charities, governance and socially responsible practices.


Pimco Climate Bond

Responsible Positive Prospect-rated PIMCO Climate Bond strategy is built and managed from the bottom-up, bond by bond, based in the belief that the insights from the research team are essential to spot the likely winners of the transition to a net-zero carbon economy.

It invests in issuers demonstrating global leadership of climate action through labelled and unlabelled green bonds targeting specific low-carbon investments, as well as climate leaders demonstrating innovative approaches to environmental sustainability.

The fund invests in three key segments. First, green bonds issued explicitly for environmental or climate-related projects. Secondly, unlabelled green bonds issued by companies in sectors structurally low in carbon emissions, such as solar panel companies and electric transport. Finally, climate leaders which can be bonds from any sector but must be from issuers that lead in mitigating carbon emissions in the way they operate.


Jake Moeller is senior investment consultant at Square Mile Investment Consulting and Research. The views expressed above should not be taken as investment advice.

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